UG Stammkapital: Incorporating a company in Germany has never been easier

firma.de
updated on
11. February 2019
5 minutes reading time

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Germany: A founders’ paradise! Here it’s possible to incorporate a company with just one euro of Stammkapital (share capital in English) and still enjoy limitation of liability.

In contrast to the English limited (ltd.), German law applies exclusively to the Unternehmergesellschaft (UG). The UG (haftungsbeschränkt) – the real name for the “1-Euro-GmbH” – can be formed with a share capital of just one euro. A dream for any new founder with a good idea but without the required share capital – or Stammkapital in German.

In this article, we explain to you what you must pay attention when it comes to the UG share capital (Stammkapital).

Nevertheless, entrepreneurs should remember that the €1 of share capital is not the same as the start-up costs. You should also bear in mind that notary costs and fees for the commercial register (Handelsregister) and business registration also need to be factored in.

Things to consider when determining your UG’s Stammkapital

The share capital for your UG should be able to cover:

Company formation costs

Notary costs

Handelsregister fees

Other consultancy costs, e.g. for a lawyer and/or tax consultant

Business registrations (i.e. Gewerbeanmeldung etc.)

Start-up costs

Capital reserves

Be careful if your share capital is too low

Even though the UG is an excellent legal form, especially for start-ups, many aren’t aware that even a single euro entails a certain risk. Inadequate security with sufficient share capital can always also involve the risk of insolvency.

Bear in mind that a CEO is generally obliged to file in good time in the event of insolvency. So give your UG sufficient share capital or think about doing a capital increase at some point. This enables you to plan for the long-term and avoid liquidity bottlenecks.

Build up reserves

The UG has is obligated to set aside reserves. This means that 25% of the annual profit must be retained as a reserve. This must be continued until the share capital of a GmbH, i.e. € 25,000, is reached. The UG can then be converted into a GmbH.

If you would like to increase your share capital, a visit to the notary is always necessary in order to carry out a capital increase.

A UG is therefore ideally suited as a starting legal form if you wish to establish a GmbH but do not have the necessary share capital. Because as soon as the €25,000 are reached, you can turn your UG into a GmbH.

The information published on our site is all written and checked by experts with the greatest care. Nevertheless, we cannot guarantee the accuracy of this information, as laws and regulations are subject to constant change. Therefore, always consult an expert in a specific case – we would be happy to connect you with the right professional.

firma.de assumes no liability for damages caused by errors in the texts.